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India's 2018 gold demand to lag due to GST, new transparency rules: WGC

Gold demand in India is likely to remain below its 10-year average for a third year in 2018

Reuters  |  MUMBAI 



demand in is likely to remain below its 10-year average for a third year in 2018 as higher taxes and new transparency rules on purchases may cap last year's rebound in buying, the World Council (WGC) said on Tuesday.

is the world's second-biggest consumer and lower demand there could rein in global prices that have risen 8 percent since the middle of December, although a drop in imports would help reduce its trade deficit.

consumption in 2018 will likely be between 700 and 800 tonnes versus 727 tonnes last year, Somasundaram PR, the of WGC's Indian operations, said on Tuesday. Indian demand averaged 840 tonnes over the last 10 years.

demand will lag because of the higher goods and services tax (GST) on bullion purchases imposed in 2017 and measures to track purchases, he said.

In July, the GST on was raised to 3 percent from 1.2 percent. has also made it mandatory for customers to disclose their tax code, or Permanent Account Number (PAN), for high-value purchases.

The government moves have disrupted the business of the small jewellers that account for nearly two-thirds of India's total sales, Somasundaram said.

"More changes are coming in like hall marking, responsible sourcing, all this will continue to disrupt the industry... It will take two years for to reach normal demand level," he said.

is a mainstay of Indian culture, serving as the primary vehicle for household savings for hundreds of millions of people in Asia's third-largest economy.

demand in the country rose 9 percent in 2017 from 2016 to 726.9 tonnes as jewellery demand rose 12 percent from a year ago, the said in a report published on Tuesday.




First Published: Tue, February 06 2018. 10:37 IST